United States v. Bacall

• Decision Date: 28 July 1971
• Docket Number: 25429.,No. 25428,25428
• Citation: 443 F.2d 1050
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. John BACALL, Defendant-Appellant. UNITED STATES of America, Plaintiff-Appellee, v. JOHN BACALL IMPORTS, LTD., Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

443 F.2d 1050 (1971)

UNITED STATES of America, Plaintiff-Appellee, v. John BACALL, Defendant-Appellant.

UNITED STATES of America, Plaintiff-Appellee, v. JOHN BACALL IMPORTS, LTD., Defendant-Appellant.

Nos. 25428, 25429.

United States Court of Appeals, Ninth Circuit.

May 11, 1971.

Rehearing Denied July 28, 1971.

COPYRIGHT MATERIAL OMITTED

Herman F. Selvin (argued), Donald S. Greenberg, of Kaplan, Livingston, Goodwin, Berkowitz & Selvin, Beverly Hills, Cal., for defendants-appellants.

Larry L. Dier, Asst. U. S. Atty. (argued), Robert L. Meyer, U. S. Atty., David R. Nissen, Chief, Crim. Div., Los Angeles, Cal., for plaintiff-appellee.

Before BARNES, DUNIWAY and TRASK, Circuit Judges.

DUNIWAY, Circuit Judge:

Having waived jury trial and special findings of fact, Rule 23(a), (c), F.R. Crim.P., codefendants Bacall and John Bacall Imports, Ltd. were each convicted on four counts charging violation of 18 U.S.C. § 542 by falsely stating on Customs invoices the cost of fabrics purchased from the French supplier Blech Freres (Blech). Bacall was sentenced to serve two years imprisonment on each count, to run consecutively, and to pay a fine of $5,000.00 on each count, making a total term of 8 years imprisonment and a total fine of $20,000.00. John Bacall Imports, Ltd. was sentenced to pay a fine of $5,000.00 on each count, making a total fine of $20,000.00. We affirm the convictions on Counts I, III and IV, and reverse the convictions on Count II.

A. The facts.

John Bacall Imports, Ltd., is a one-man corporation, consisting of its owner John Bacall. Bacall is in the business of importing fabrics from France and Italy.¹ His practice has been to travel to those countries, visiting various textile manufacturers and merchants and placing his orders with them. Bacall would engage a French (or Italian) agent to book space on a vessel leaving from a French (or Italian) port for Los Angeles; thus all the fabrics ordered during any given trip from the various French (or Italian) suppliers would arrive at Los Angeles at one time. Once the shipments were through Customs, Bacall would bring the fabrics to his warehouse, where he would break the shipments down and send the fabrics to his customers throughout the United States. Bacall generally paid his European suppliers by sending them cashier's checks drawn on various banks in or near Los Angeles. This cycle of European travel to place orders, shipment to Los Angeles, and payment by check recurred each year. In question here are shipments from France that arrived in Los Angeles in the months of June in the years 1963, 1964, 1965, and 1966.

All the fabrics consigned to Bacall aboard a given vessel arriving in Los Angeles would be documented in one Customs Entry; thus there was one Customs Entry for each of the French shipments here in question. Included in each Customs Entry were Special Customs Invoices (Customs form 5515), one corresponding to the fabrics purchased from each French supplier. Each invoice required Bacall to provide a full description of the fabrics from that supplier and to state the total cost of those fabrics.

In April, 1966 and July, 1966 two other shipments of fabrics consigned to Bacall arrived in Los Angeles. The fabrics were placed in a Customs warehouse, where Customs agents examined them and took samples to determine their composition. The fabrics were then released to Bacall, who transferred them to his warehouse and commingled them with other imported textiles on which the duties had previously been paid. The Customs agents ran laboratory analyses on the samples; the results of the analyses showed that many of the fabrics had been misdescribed in the invoices, always in such a way as to lower the duty to be paid. On November 4 and 10, 1966, Customs agents, acting without a warrant, went to Bacall's warehouse, seized all the fabrics there and transported them to a Customs warehouse in a moving van. They proceeded to make an exhaustive inventory of the fabrics, classifying them according to actual composition, declared composition, and supplier. The results of the inventory were collated and summarized by Agent Meglen, who oversaw the seizure and inventory.

On the basis of the inventory findings and with the approval of his supervisor, Agent Meglen set in motion a foreign investigation. On January 9, 1967, he wrote a lengthy letter, Exhibit 7, referring the Bacall case to the United States Customs representative in Paris, one Jacques Changeux, asking Changeux to refer the case to the French Customs Service (under the terms of a French-American agreement) and to request that French customs investigate Bacall's dealings with the French suppliers. Meglen's referral letter first reviewed generally the case existing against Bacall at that time. The case then consisted entirely of evidence, obtained before and during the seizure and inventory, showing that Bacall had knowingly misdescribed on Customs invoices both the composition (wool, silk, etc.) and the classification (embroidery, woven, knit, etc.) of the imported fabrics. Doubt also existed as to whether the shipments were actually "job lots" or "close-outs" as invoiced, but there was then no evidence that they were not.

Meglen's referral letter then set out general instructions for the conduct of the French investigation. The instructions included the following Exhibit 7, page 4:

"It is requested that you obtain the following information from the foreign shippers or sellers. * * *

Was the merchandise in fact, `job lot\'? * * * Similar fraudulent invoicing can be substantiated on importations dating back to 1964 * * *, and similar shipments have been received yearly by John Bacall Imports, Ltd., dating back to 1962.

* * * * * *

Do these invoices presented for Customs Entry reflect the true purchase price?

* * *?"

Meglen's referral letter then set out in considerable detail the evidence showing that Bacall had misdescribed the imported fabrics; most of the evidence had been obtained through the seizure and inventory. The evidence was organized to correspond to Bacall's various French suppliers. The entire entry under the Blech heading is as follows Exhibit 7, page 9:

"There does not appear to be any false invoicing with respect to composition for the fabrics from this seller. The fact that most of the fabric is invoiced in a manner which results in its classification at a high rate of duty would seem to preclude the possibility that it is other than as invoiced. The value of the fabric is, however, open to question."

Changeux duly referred the case to the French Customs Service. He wrote a second, much briefer, referral letter in French defendant's Exhibit G, and attached to it Meglen's referral letter. Changeux's letter again summarized the case against Bacall, focussing again on misdescription of the fabrics. The letter made no mention of specific instances of possible undertatement of costs, though it did refer to general suspicions concerning stated prices, arising from the "job lot" and "close-out" characterizations. Changeux's letter also stated that (translated from the French):

"We would be very grateful if you would undertake an investigation with the suppliers and the broker in question * * * to determine the composition and the real value of the exported merchandise, and if you would furnish us with all the documents relating to these exportations that you are able to obtain."

The case was assigned to Raymond Lalisse of the French Customs Service. Lalisse received the letters from Changeux and Agent Meglen sometime in January, 1967; he began the investigation into Bacall's French dealings on March 20, 1967, and had his first interview with persons at Blech on June 12, 1967. Lalisse obtained from the Blech files several letters showing what Bacall had paid Blech for fabrics purchased in the years 1963, 1964, 1965, and 1966. Using the information obtained from the Blech files, customs agents in this country examined Bacall's banking transactions and obtained cashier's checks used by him to pay Blech. The payments included special finishing and processing charges above and beyond the cost of the unfinished goods. The purchase prices stated on the Bacall Customs invoices for the Blech fabrics for each of these years reflected only the cost of the unfinished goods. Thus, using the letters obtained by Lalisse from the Blech files, and in this country on the basis of those files, the government was able to show that Bacall had knowingly understated the purchase price of the Blech importations for each of the shipments in question.

In addition to producing proof of Bacall's knowing understatement of the Blech prices, the French investigation yielded evidence that Bacall had requested from other foreign suppliers, and had submitted to Customs, false invoices, and that these false invoices invariably misdescribed the accompanying fabrics in such a way as to materially reduce the apparent duty owed. Armed with this evidence, the government sought an order of forfeiture under 19 U.S.C. § 1592 of the two shipments that had arrived in Los Angeles in April and July 1966 and that had been among the commingled materials seized without warrant from Bacall's warehouse. Bacall in turn brought a replevin action for the return of the seized goods, claiming that they had been unlawfully seized. The two actions were consolidated for trial in the district court. The court found the seizure to have violated Bacall's rights under the Fourth Amendment, denied the government's request for forfeiture, and ordered all the seized material returned to Bacall. John Bacall Imports, Ltd. v. United States, C.D.Cal., 1968, 287 F.Supp. 916.

The government appealed. We affirmed that part of the district court's judgment holding the seizure unlawful, but reversed that part of the judgment requiring the return of all the seized material. John Bacall Imports, Ltd. v. United States, 9 Cir., 1969, 412 F.2d 586. We...